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The Sixth Circuit Adopts Narrow Interpretations of “Causation” and “Remuneration” for False Claims Act Suits Based on Alleged Kickback Schemes

On March 28, 2023, the Sixth Circuit issued an important False Claims Act (“FCA”) decision in U.S. ex rel. Shannon Martin, et al. v. Darren Hathaway, et al., No. 22-1463, which (1) adopted a “but-for” causation standard for FCA suits premised on alleged violations of the Anti-Kickback Statute (“AKS”), and (2) narrowly interpreted “remuneration” under the AKS to mean “payments or other transfers of value,” as opposed to “anything-of-value” to another. Both holdings rejected Relators’ broad interpretation of the AKS, as well the Government’s view in a supporting amicus brief. Martin places some limits on the scope of AKS and FCA liability in the Sixth Circuit, and it also contributes to a circuit split on causation that may increase the odds of Supreme Court review of the standard.


The Relators in Martin were Dr. Shannon Martin, an ophthalmologist, and her husband Douglas Martin, an executive at Oaklawn Hospital (the “Hospital”). The defendants were Dr. Darren Hathaway, his ophthalmology practice, South Michigan Ophthalmology, P.C. (the “Ophthalmology Group”), and the Hospital. Dr. Martin worked as an ophthalmologist at the Ophthalmology Group.

For years, the Hospital and the Ophthalmology Group generally sent one another patient referrals. When Hospital patients needed to see an eye doctor, they were referred to the Ophthalmology Group. When Ophthalmology Group patients needed surgery, they were referred to the Hospital. 

Dr. Martin alleged that she tried to get hired as the Hospital’s internal ophthalmologist. The Hospital sent her a tentative offer, but later declined to hire her. She alleged that the Hospital’s about-face was because Dr. Hathaway informed the Hospital that he would no longer send patient referrals from the Ophthalmology Group to the Hospital. Relators contended that the Hospital refused to hire Dr. Martin in exchange for Dr. Hathaway’s commitment to keep sending the Hospital surgery referrals. The Government declined to intervene, and the district court later dismissed the case.


The Sixth Circuit decided whether allegedly false claims for continued referrals “result from” violations of the AKS. The Sixth Circuit adopted a “but-for” causation standard for FCA suits premised on alleged kickback schemes, and concluded that the purported referrals did not result from an alleged AKS violation.

The FCA prohibits claims for “items or services resulting from a violation” of the AKS. 31 U.S.C. § 3729(a)(1)(A); 42 U.S.C. § 1320a-7b(g). The Court reasoned that the ordinary meaning of “resulting from” is “but-for causation,” as recently explained by the Supreme Court interpreting the same language under the Controlled Substances Act. From there, the Sixth Circuit followed the Eighth Circuit’s plain-language interpretation of “resulting from” in U.S. ex rel. Cairns v. D.S. Medical L.L.C., and distinguished the Third Circuit’s contrary conclusion as improperly relying on legislative history in the face of unambiguous statutory language. To satisfy the “but-for” causation requirement, Relators were required to plead and prove that the “referrals would not have been made without remuneration, and that claims would not have been submitted to the government without those referrals.”

Relators could not make that showing here. That was because the Hospital and South Michigan Ophthalmology referred patients to one another both before and after the Hospital decided not to hire Dr. Martin. Since the general referral practices were unchanged, even if a kickback had been alleged, causation could not be plausibly established.


The Sixth Circuit also adopted a narrow interpretation of “remuneration” to mean only “payments and other transfers of value” and not the much broader “anything-of-value” definition advocated by Relators and the Government. 

The AKS prohibits medical providers from making referrals in return for “remuneration.” 42 U.S.C. § 1320a7b(b)(1)(A). The AKS does not define “remuneration.” The Court interpreted the word’s plain meaning, relying on dictionary definitions that define the word as a “form of payment.” The Court also reasoned that, because the AKS creates both civil and criminal liability, the rule of lenity required narrowly construing any potential ambiguity in the word. Finally, the Court criticized the “anything-of-value” interpretation that Relators advanced as lacking a “coherent end point.”

Relators’ allegations in Martin turned on the Hospital’s decision not to hire Dr. Martin. Those allegations were insufficient to show remuneration to Dr. Hathaway. While the Hospital’s no-hire decision could have helped Dr. Hathaway’s practice at the Ophthalmology Group, it was not a payment or value transfer from the Hospital. Without remuneration, Relators’ complaint failed to allege a cognizable kickback scheme.

Takeaways from the Court’s Decision

The Martin decision is noteworthy for a few reasons. The “but-for” causation holding reinforces an existing circuit split. The Sixth and Eighth Circuits now endorse a “but-for” causation standard. By contrast, the Third Circuit requires only a “link” sufficient to show the patient was “exposed” to an illegal recommendation or referral and the provider submitted a claim for reimbursement or payment. As a result of the circuit split, it is possible the Supreme Court may elect to weigh in on this issue in the future. For now, so as long as the circuit split remains, expect Relators to avoid bringing AKS-based FCA suits in circuits requiring “but-for” causation. 

The defense bar will likely seize upon the Sixth Circuit’s narrow interpretation of “remuneration” to challenge qui tam FCA cases alleging hypothetical or vague theories of value transfers under the AKS. Many cases in the past have alleged a theory that kickbacks “taint” claims for payment and render them false. Martin requires a closer causal nexus between the alleged kickback and a claim for payment to the Government. Although Martin’s kickback allegations are atypical, the Sixth Circuit’s narrow remuneration holding may impose some limitations on expansive kickback theories to allege FCA claims.


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Brian P. Dunphy

Member / Co-Chair, Health Care Enforcement Defense Practice

Brian P. Dunphy is a member of the Health Care Enforcement & Investigations Group at Mintz. He defends clients facing government investigations and whistleblower complaints regarding alleged violations of the federal False Claims Act. Brian also handles commercial health care litigation.
Grady R. Campion is a Mintz attorney who focuses his practice on complex commercial litigation and white collar matters. He represents clients in a variety of industries, including financial services.